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Using Procure to Order to Source
Buy Items Cross Organizations
Maggie Coleman
Margaret Coleman Consulting
NorCal OAUG Training DayJuly 19, 2004
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Agenda
ATO item sourcing options in Oracle OrderManagement
How to source ATO items from an internalinventory organization
System steps for a Procure to Orderprocess
Resulting inter-company invoicing andaccounting for cross op unit transfers
Challenges and issues
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Oracle Functionality
Order ManagementAssemble to Order
Procure to Order
Configure to order Internal requisitions and orders
Within and cross operating units
Inter-company invoicing Cross operating unit item sourcing
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Oracle ATO Sourcing Options
Customer orders an ATO make item
Item shipped directly from the mfg org to the customer Customer orders an ATO buy item
Purchased from a supplier Shipped from inventory or drop shipped from supplier
to the customer (Back to Back orders)
Customer orders an ATO item Sourced from another inventory org Inventory transferred from one inventory org to the
selling org before shipment to the customer
Workaround to be discussed aka
Procure to Order Supply to Order
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Make Item Assemble to Order Process
Planning make/buy code=Make
ATO Flag = Yes
OM workflow creates discrete job to requestmanufacturing of an item to order
Linked to the sales order line A manufacturing org builds the product to order
Inventory is reserved to sales order line uponproduction completion
Partial shipments allowed Auto-split SO lines
ATO configurations and standard items supported
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Make Item ATO Flow Status Codes
BOOKED
PRODUCTION_ELIGIBLE
PRODUCTION_OPEN PRODUCTION_PARTIAL
PRODUCTION_COMPLETE
CLOSED
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Procure to Order or Buy ATO Process
Planning make/buy code=Buy
ATO Flag = Yes OM workflow creates a purchase requisition to
request the ordering of the item
A purchase order is created and is linked to thesales order line.
Inventory is reserved to the sales order line uponPO receipt
Partial shipments allowed Auto-split SO lines
Drop shipments allowed = Back to Back orders
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OM Buy ATO Flow Status Codes
BOOKED
PO_REQ_REQUESTED
PO_REQ_CREATED PO_CREATED
PO_PARTIAL
PO_RECEIVED CLOSED
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Sample Multi-Org Architecture
EuroSOB
AsiaSOB
USSOB
Euro OpUnit AsiaOp UnitUS Op Unit
Mfg Org#1
Mfg Org#2
Euro InvOrg
Asia InvOrg
Master Inventory Organization
Oracle ERP Instance
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Inter-Org Material Flow
Direct shipment from source org to thecustomer
Within or cross operating units
Transfer material from one inventory orgto another inventory org before customershipment
Within or cross operating units Use internal orders to transfer material
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Direct Ship ProcessShip to Customer from Mfg Org
Selling Op UnitSourcing Op Unit
Final Assy Org
Sourcing Op Unit
Sub Assy Org
Customer
sales order for
Finished
Product
ATO Job - build
assy
Internal
Requisition -
source board
from Sub Org
Internal sales
order - request
to ship sub to
US - FA
Discrete Job -
build board to
stock
Planning
Planning Complete Job
Ship I/O
Receive I/R
Create I/O
Order Import
Create FAS
Complete Assy
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Direct Ship Process
SO warehouse is source organization Does not transfer inventory value or quantity to selling
organization
Cannot use in-transit inventory
AR invoice created upon shipment from source org
Uses inter-company invoicing for cross op unit shipments
One shipment transaction
One demand feeding planning
Does not use internal req/orders No config issues
ATO flag set same in all inventory orgs
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Inter-Company/Org Material FlowSelling
Op Unit
Sourcing Op Unit
Final Assy Org
Sourcing Op Unit
Sub Assy Org
Customer
sales order for
FinishedProduct
Internal
requisition -
source item
from US Org
Internal sales
order - request
to ship assy to
UK
ATO Job - build
assy
Internal
Requisition -
source boardfrom Sub Org
Internal sales
order - request
to ship sub toUS - FA
Discrete Job -
build board to
stock
Create Req
Req Import
Create I/O
Order Import
Create FAS
Planning
Planning Complete Job
Ship I/O
Receive I/R
Complete Assy
Receive I/R
Ship I/O
Create I/O
Order Import
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Ship to Customer from Selling Org SO line warehouse is not sourcing org
Utilize internal requisitions/orders or inter-org transfers With or without in-transit inventory
In-transit leadtime offset for internal order demand
Two shipments transactions Sourcing org on internal order into in-transit
Selling org on customer order
Transfers inventory value and quantity to selling org
AR invoice created upon shipment from selling org
Option to use inter-company invoicing INV: Intercompany Invoice for Internal Orders = Yes
ATO flag can be different in each inventory org
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Inter-Company Invoicing Process
Selling Op Unit Sourcing Op Unit
Create Inter-
Company AR
Invoice
US Ships/Sells
Item to Non-Us
Create Inter-
Company AP
Invoice
UK Receives/
Buys Item
from US
Internal
requisition -
source item
from US Org
Internal sales
order - request
to ship assy to
Non-US
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Internally Sourced ATO Items
Use a planning function to create internalreqs from sales order demand
ATO flag set to Yes in sourcing org, No in
selling org Models/options not supported on internal
reqs/orders
No link from external sales order to internal
req/order/discrete job
No reservation upon inventory receipt
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Internally Sourced ATO Items
Problems and workarounds
Procure to order only creates purchaserequisitions
Switch purchase requisition into internal requisition
after sales order line progression and beforerequisition import
Models and options cannot be placed on aninternal order
Create newly created item/BOM/routing in eachsourcing organization after config is created by OM
Place ATO config on internal order
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Internally Sourced ATO Item Process Planning make/buy code=Buy
ATO Flag = Yes
Source type = Inventory
Source organization = sourcing inventory org
OM workflow purchase requisition to requestpurchase of an item to order
Workaround to change into an internal requisitionif items source type = Inventory
Internal requisition triggers creation of internalsales order from source org to selling organization
ATO job is created and completed in mfg org
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Internally Sourced ATO Item Process
Internal sales order is picked, shipped and putinto in-transit inventory
Inventory is reserved to the customer salesorder line upon internal requisition receipt
Partial shipments allowed
Auto-split SO lines
ATO standard items supported
Workaround to internally order configuration items
Same item can be make ATO in one org & buyATO in another org
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Book Customer Order in Selling Op Unit
Line 1.1 is an internally sourced ATO Buy Item
Line 2.1 is a supplier sourced ATO Buy Item
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Progress Order Line to Create Requisition
Line Actions Button
Or run AutoCreate Purchase Requisitions in BOM responsibility
Inserts a record into the PO requisitions interface table
Workaround used to change PR into internal requisition
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PO Req Requested from OM Workflow
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Import Requisition
Selling Op Unit PO responsibility
Import Source = CTO
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ATO Supplier Buy ItemCreate standard PO or blanket release
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PO Created Workflow Status
Line 1.1 is an internally sourced ATO Buy Item
Line 2.1 is a supplier sourced ATO Buy Item
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Create Internal Sales Order In Mfg Op Unit
Run PO Create Internal Orders in the selling
op unit Inserts internal sales order information in the
OM interface tables in the sourcing op unit
Run OM Order Import in the sourcing opunit
Validates and creates internal sales order in the
sourcing op unit Customer = selling organization
Will book automatically if no missing data
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Internal Sales Order
3 day calendar day transit time
Ship from sourcing inv org to selling inv org
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Line Actions Button
Or run AutoCreate Final Assembly Orders in WIP responsibility
Creates ATO discrete job
Progress Order Line to Create Job
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ATO Discrete Job
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Viewing Supply
Reservation Details
Purchase requisition, purchase order or WIP Job
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Viewing Supply
Supply to Order Workbench
Purchase requisition, purchase order or WIP Job
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Fulfilling ATO Supply Request Internally sourced ATO item
Build ATO job in a manufacturing org Pick and ship internal order
Receive internal requisition
Supplier sourced ATO item
Receive purchase order
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Internal Order ShipmentAccounting Entries in Shipping Org
Material Transaction Accounting Distributions
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Internal Order ReceiptAccounting Entries in Receiving Org
Material Transaction Accounting Distributions
C t I t C AR I i
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Create Inter-Company AR InvoiceIn Supplying Op Unit
Run Create Inter-company AR Invoices in Inventory- Inserts into AR invoice interface tables
Run Autoinvoice in AR
- Creates AR inter-company invoice from interface
I t C AR I i
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Inter-Company AR Invoice
In Sourcing Op Unit
Revenue Accounting Entry
C I C AP I i
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Create Inter-Company AP InvoiceIn Selling Op Unit
Run Create Inter-company AP Invoices in Inventory- Inserts into AP expense report tables
Run Expense Report Import in AP
- Creates AP inter-company invoice from interface
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Inter-company AP InvoiceIn Selling Op Unit
Invoice Distributions
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Challenges and IssuesATO Buy Items
SO line cancellations/splits/qty changes PO/requisition must be de-linked first
Workflow creates new requisition if backgroundautocreate process is scheduled - put line on
hold first Cancel original requisition
New requisition created for changed/split lines
Cannot re-link an existing requisition or PO Partial shipments will automatically split line and
retain reservationWSH: Retain ATO Reservations profile option
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Challenges and IssuesATO Buy Items
Requisition import grouping rules Wanted all external sales order lines on one
requisition, not supported in std functionality
SO schedule date changes Date changes allowed, does not update
requisition or purchase order.
For internal requisitions, must sync up internalrequisition, internal order, ATO discrete jobdates
Ch ll d I
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Challenges and IssuesInternally Sourced ATO Items
Requisition typeATO configurations
Create configuration item first, then create
internal req Config item data in sourcing organization
Item org assignment, BOMs, routings, internal pricelists, standard cost
Mapped shipping methods to internalcustomer locations
Ch ll d I
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Challenges and IssuesInternally Sourced ATO Items
Used descriptive flexfields for visual linkfrom external sales order to requisition tointernal sales order to discrete job
External sales order data not flowing to theinternal order
Ship sets
Customer credit checking
Shipping notes
PO Reservation up on receipt
Inter Company Invoicing and
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Inter-Company Invoicing andInternal Order Accounting Notes
COGS recorded for customer shipment ininventory
Inter-co margin is recorded using 2 entries
A credit at standard cost is recorded to marginupon internal order ship confirm
A second entry debits margin at transfer price
through the inter-company AP invoice. Margin = Transfer priceStandard cost
d
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Inter-Company Invoicing andInternal Order Accounting Issues
Inter-company invoices uses an internalorder price list
Shipping network setup should not use inter-
org transfer charges Inter-org AR & Inter-org AP should clear out
each other
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Inter-Company Invoicing andInternal Order Accounting Issues
RMA requires manual entry to correctaccounting
Oracle does not have functionality to returnproduct directly to the manufacturing org.
Oracles solution is to sell inventory back tomanufacturing org
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Contact Information
Maggie Coleman
Margaret Coleman Consulting
Email: [email protected] Phone: 415-215-1112
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